Excellent read here from the Cato Institute on the impact of government regulation and Fed policy and the contribution each has in the financial crisis:
The key lesson from the current financial crisis and recession is that a government imposed financial architecture is unlikely to persist for any significant length of time.
Global market developments, and the need to channel resources toward opportunities
perceived to be the least risky and most profitable, will continue to modify institutional
financial arrangements. Imposing onerous financial regulations will only impede the
reconstitution of financial institutions, delay the recovery, and dampen the pace of long-term economic growth.